Business Costs and the Increase to the Minimum Wage
Rising business costs are still a worry in 2023. Supply chain costs are high, energy prices are still expensive and labour costs are on the rise. These increasing costs mean higher expenditure and lower margins on your products and/or services. If left unchecked, that could mean a dip in your predicted profits for the quarter.
The good news is that by acting now to manage these increases you can stay on top of these costs. And with a proper financial plan, you can keep your business turning a profit.
A rise in the National Living Wage and Minimum Wage
A rise in the National Living Wage (NLW) and the National Minimum Wage (NMW) was announced back in November 2022. This increase means that the NLW rises to £10.42 from 1 April 2023, an increase of 92 pence or 9.7 per cent.
The size of your overall wage increase will depend on the age of your employees and whether they’re currently working as part of an apprenticeship scheme. However, the increase in your payroll costs is definitely something to factor into your financial planning for the year.
The new NLW and NMW rates from 1 April 2023 will be:
The impact of inflation
In addition to the rising cost of labour, inflation is still at an extremely high level. UK inflation sits at 10.1% as of January 2023, and this is creating pressure on your general running costs and the price of materials. Petrol prices are forecast to rise again after several months of falling prices. Electricity and gas costs are continuing to fall but are unlikely to drop to pre-pandemic price levels. And Brexit and the resulting supply chain issues have driven up the cost of many imported products.
Time to review your pricing?
Is it time to put your prices up? Ideally, your business should increase costs by a tiny amount each year, rather than by a big jump every five years, for instance. Small increases help prevent price shocks for customers, and keep your business in line with the rest of the market.
Can you also cut costs?
If you don’t think increasing your prices is an option, or you still need to make more of a change, you may need to cut back your spending. We look at your business line by line, so we can help you identify areas where you might be able to trim the fat.
Talk to us about managing your business costs
Keeping on top of business costs in 2023 will be a challenge. But with the right mindset, planning and forecasting, you can stay one step ahead of the curve.
Talk to us about your ongoing costs. We’ll review your business expenses to see where savings can be made and where you can push your margins to remain profitable.